Consultants have been the missing link in the Finnish asset management business, says Timo Leskinen, head of investment at Opstock Asset Management. “So far, I would say, all institutional clients have been without the services of good proper consultants. Using the services of overseas asset managers, Finnish institutions have often had to do the consultancy work themselves.”
There are always two sides to the coin: Kaj-Olof Lindgren, general manager of the Helsinki office of Lombard International Assurance, says: “The Finns are starting to understand the EU area. I mean, if an EU company sells their products in another country, they can be trusted as much as domestic products.”
Even if international companies have gained the trust of the Finns, it does not mean they adopt foreign habits. “Our main focus has been on asset management if the client gives us clear specifications on what to do; but then again, because we have had to go out there to find the business, it has been necessary to, sort of, teach our potential customers about asset allocation,” comments Leskinen of Opstock. “Situations where a consultancy would be given specific parameters by an investor to negotiate with the asset managers and then suggest a decision are rare.”
The two main Finnish consultancies, Pensionservice (EPS) and Porasto, offer actuarial services, various scenario models and help in setting up new ones for local companies. So far, neither has seen a need to start offering investment consultancy services, especially as their actuarial departments have been steadily growing.
All consultants and asset managers agree that the main thing an international consultant has to know is that they have to have an understanding of the local society; for example, they would have to know how the Finnish pension system works.
“If they do not comprehend the system they might be reluctant to give an answer to the investor. This has resulted in institutions making the decision themselves without outside advice,” Leskinen explains.
Lindgren agrees, explaining that the very least an international company can do is to have Finnish and Swedish-speaking staff with all the material and administration in both local languages. He says some of the overseas companies operating in Finland speak only their own language. “There has been extremely strong growth in Finnish investment, sales of personal life insurance policies have gone up 100%. Next year Aon is expecting the turnover for retail insurances to go up to FIM35bn (e5.9bn),” says Seppo Hero, managing director of Aon Risk Services.
Wassum, the Stockholm-based consultancy, is opening an office in Finland in June. “Finland is an interesting market. There is a lot going on there and it is also a euro-market. It will be very interesting to see how it develops,” says Jan Waage, chairman of Wassum.
Wassum will offer a similar range of products in Finland to those it markets in Norway and Sweden, including manager monitoring and investment strategy planning.
Some small consultancies have sprung up recently all over the Nordic region, as the Scandinavian market is full of small mandates that the larger consultants and asset managers might see as too small. Finland too, has seen the boom. Leskinen is not fully convinced by their expertise: “Some of these consultants do not seem to have a very good idea of what they are doing at all. There seems to be a lack of understanding in asset allocation and index benchmarking within the wider picture.”